Before You Spend Your Auto Accident Settlement, Make Sure Everyone Has Been Paid

If you have been injured in an auto accident which was not your fault, you are probably entitled to a financial settlement from the at fault driver's insurance company. You may quickly start making plans on how you are going to spend your windfall. Unfortunately, you may want to slow your roll. You will quickly find out that the total amount of the settlement will not all be coming your way. There are certain expenses that must be paid before you can get yours. 

You Must Pay Your Attorney

On average someone who is represented by an attorney in a car accident case will receive approximately 3 1/2 times the settlement money over people who choose to defend themselves. This is often because the insurance companies know that your attorney possesses the education and experience needed to negotiate your case.

Most car accident attorneys do not collect any up front fees. They will work your case on a contingency basis, which means they will not get paid unless they win your case. But once they win, they will get a percentage of your settlement. The amount of the percentage will vary based on your state, as well as the agreement you have in place up front.

The percentage you owe may vary based on how much work the lawyer has put into your case at the point it is settled, as well as the limits set by your state. For example, if your attorney is able to get the insurance company to settle with a simple demand letter, you may owe 25%, but if your case has to go through mediation, you may owe 30%. All contingency fees should be clearly outlined at the time you contract with your attorney.

In addition to the contingency fee, you may also owe your attorney for any expenses they have paid prior to your case being settled. They should present you with a detailed statement of what was spent and why. Your attorney will usually deduct what is owed to them prior to forwarding the balance on to you.

You Must Pay Any Third Party Liens

Sometimes personal injury cases can take an extended period of time. During this time you will often incur various expenses that may be paid by others. Those who have paid these expenses have the right to be reimbursed. To do so, they may file a lawsuit to have a lien placed against any future settlement you may receive. This is referred to as a third party lien. Some examples of those who may file a lien are:

Medicare/Medicaid- If any of your medical bills are paid by Medicaid or Medicare, you may be required to assign your right to payment for your medical care to the state. This assignment allows the government to be reimbursed from the proceeds of any settlement you receive. Even if you choose not to pursue a settlement, the state has the option to sue.

Doctors/Dentists/Hospitals and other medical providers- Anyone who provided you treatment as a result of your accident, and who not have been paid in full has the right to file a lien against your settlement. The good news is, you will probably not owe the full face amount of the bill. Most providers will negotiate the amount you have to pay back.

Some will only charge you the amount that would have been paid by the insurance company, while others such as Medicare, are prohibited from negotiating. Speak to your attorney about negotiating a settlement when you can, since this could result in real savings to you and more of your settlement in your pocket.

Health Insurance/Auto Insurance Carriers- If either of these companies have paid out as a result of the accident, they may have the right to be reimbursed. Some insurance companies will not come to you looking for the money, but will go after the at fault insurance company through a process called subrogation.

When you and your attorney know of liens against you prior to settlement, your lawyer will be able to take these into consideration, and possibly negotiate a higher settlement amount as a result of the lien. While this may or may not mean any additional money in your pocket, it may mean that everyone else will be able to be paid.

Talk to a professional, such as Master Weinstein Shatz Moyer, P.C., for more information.